Hiking with the Honchos at The Container Store

Swanky dinners, trips and everyday praise are part of The Container Store's culture.

Some business owners claim that employee loyalty is directly tied to how good employees feel about their jobs. It’s a debatable concept, but it seems to be working for The Container Store, the 25-year-old Dallas retail chain that invented the concept of selling customized storage products to consumers. From humble beginnings in a rented storefront with a wooden box for a cash register, store founders Garrett Boone and Kip Tindell embraced the idea that if you treat your people well, success will naturally follow. It’s an approach that has enabled the company to grow into a recognized presence in strip malls throughout the United States, with 28 stores and more than 2,000 employees. It’s also landed the company on Fortune magazine’s annual list of "100 Best Companies to Work For" every year since 1999.

Respecting employees is not just a values statement that hangs on the wall, says Boone, who is company chairman. It’s an intrinsic element of the almost cultish atmosphere of support and encouragement that pervades each store. "Every person in this company is extremely important," he says. "The guy who unloads the trucks at 5 a.m. is critical to the chain of events that leads to great customer service."

His commitment to valuing employees is borne out in wages. Employees are paid 50 to 100 percent more than the industry average, receive lucrative benefit packages and are given more than 200 hours of training in the first year--compared to less than 10 hours at most other retail chains.

Even more surprising is the family-like relationship at each store, a bond that extends throughout the company. Boone and Tindell assume almost patriarchal roles. The cofounders never miss an opportunity to acknowledge employees’ efforts and seem to know all 2,000 by their first names. They spend much of their time working in the stores, getting to know intimate details about employees’ kids and hobbies as well as their in-store achievements such as completing their first closet design for a customer. They don’t do it just to make people feel special; it’s part of the business philosophy. "Knowing our employees helps us better serve the customers," Boone says. "It’s part and parcel of what we’ve been doing for 25 years. Treating people with respect contributes enormously to our success."

He cites retention as but one clear example of how investing time, money and thought into employees makes good business sense. Turnover across the company is 25 percent, significantly lower than that of competitors in the retail industry--where 100 percent turnover isn’t uncommon. The company doesn’t track the costs associated with training and hiring, but it sees the retention rate of employees as a huge cost-savings and benefit to customers. "People who are here year after year gain more knowledge about what customers need, and they pass that on to new employees," Boone says. "When they do a better job, customers spend more." That knowledge helps each store achieve the $50-per-customer sales goal and contributes to the company’s 25 percent annual growth. "We get better and better at this every day."

Family values On a recent busy Saturday in the Paramus, New Jersey, store, a part-time employee named Charleston who sets up product displays spent the day running around, cleaning aisles, helping customers and making sure the store looked great, says David Misek, store manager. That evening, in the "huddle," the other employees applauded Charleston and as a group thanked him for working so hard. "It was really obvious that he gave everything he had for the store, and his teammates recognized that."

These informal feel-good rituals are primary to The Container Store’s reward-and-recognition process, says Barbara Anderson, vice president of stores. While there are formal programs to celebrate major anniversaries, the real recognition comes every day, in small yet significant gestures. "Recognizing others’ efforts is something we are all responsible for."

One of the most popular ways that employees acknowledge each other is through the celebration mailbox, a voicemail system designed for employees to leave stories about good service experiences they have observed. Messages range from Boone complimenting a store for surpassing its quota to a cashier thanking a colleague for helping with a customer. Everyone in the company is encouraged to contribute and to listen to it every day, Anderson says.

There are no prizes or payoffs for being recognized in the celebration mailbox, but listening to the messages and knowing that the stories are shared with the whole company reinforces the sense of appreciation.

Even the formal recognition programs have personal touches that go beyond the traditional. For example, on five-year anniversaries, each employee receives a small wooden box that is a miniature replica of the money box Boone and Tindell used when they opened their first store because they couldn’t afford a cash register.

The Container Store honors employees on their 10th anniversary by flying them and their spouses to Dallas for a staff meeting. The veteran employee is recognized for specific company accomplishments and treated to dinner at a five-star restaurant with Boone, Tindell and other executives. "It’s a nice evening; we talked a lot about what had happened at the store over the past 10 years," says honoree Kaylynn Fuhrman, department head in the distribution center.

Oral histories The atmosphere of acknowledgment is fostered through a set of principles defined by Boone and Tindell. The six value statements represent a collection of business philosophies and stories that embody how they think a company should be run. For example, "Man in the Desert" defines how employees are expected to treat customers and each other. It’s a story about how most people who come upon a man in the desert dying of thirst would give him a glass of water, Boone says. But he also needs shelter, food and clothing. The point of the story is that employees at The Container Store are expected to do more than just give customers the glass of water. They are expected to find out what a customer’s needs are and how The Container Store can meet them.

"One equals three," another principle, says that one great person is more valuable than three good people. It’s a simple concept, but it is driven home through intensive recruiting efforts and a rigorous first week of training, where new employees learn more about the culture of the company. The real lessons, however, come when employees first arrive at the new job and see their new bosses working directly with customers. "It’s mesmerizing to see everyone pitching in. It’s very motivating."

Most companies deliver their values statements in a formal document, but Boone and Tindell prefer to dress in costumes to act out the stories. "It helps people remember them," Anderson says. "We use storytelling to keep our employees focused on our culture. It’s very important to our success."

Open access to Boone and Tindell plays a huge role in making employees feel valued. Every birthday and anniversary card includes a personal note from one of the founders. "It’s an easy thing to do, and it makes people feel good," Boone says. "We think that’s important."

Celebrate good times Employees may feel even closer to Boone and Tindell later this year at the 25th-anniversary parties held at each store. Because they wouldn’t be able to attend every party, the two founders made a video of themselves talking about the company’s history, while dressed in ’70s disco garb to represent the year it all began. The video will be played at each event, and employees will be able to have their picture taken with life-sized cutouts of Tindell and Boone. "We love doing stuff like that," says the 60-year-old Boone, who scoffs at the idea that most CEOs would be uncomfortable sending such a silly message to their employees. "Just because we have titles, it doesn’t mean we can’t still be corny."

Boone and Tindell believe that they’ve been able to expand by more than one store per year because of the antics, folksy storytelling and intense focus on appreciating your neighbor. The ranks are filled with employees who have been with the company for a decade or more, even though they could be making a lot more money in a non-retail environment, Boone says. "The people here give an effort that goes far beyond the economic rewards because they love it here."